Dow soars triple digits to a four-month high

MarkCotton

NEW YORK (MarketWatch) -- U.S. stocks rallied Tuesday, pushing the Dow Jones Industrial Average to its highest close since mid-May, aided by a sharp fall in crude-oil prices, a drop in bond yields and strong earnings from Goldman Sachs.

Hewlett-Packard Co. and Bristol-Myers Squibb Co. shares gained after the companies reshuffled their respective top managements.

"People think that oil is going to stay down for a while and there is some good earnings news with McDonald's and Goldman Sachs, where the news wasn't as bad as people feared," said Ed Peters, chief investment officer at Pan Agora. "Small stocks are doing well today which means the rally is very broad based."

The Russell 2000 Index
RUT, -1.78%
which tracks small and mid-cap stocks, rose 2.4% to 724.48.

On the broader market for equities, advancers outpaced decliners by more than 3 to 1 on the New York Stock Exchange, and by 3 to 1 on the Nasdaq.

Semiconductors
SOX, -2.58%
rallied, helped by a Credit Suisse upgrade of the chip-equipment segment. As part of its revised view, the broker upgraded to outperform from neutral its rating on Applied Materials Inc.
AMAT, -3.01%
shares of which shot up more than 6%.

Volume was 1.79 billion on the Big Board, and 2.04 billion on the Nasdaq.

The market took an early hit on news that the U.S. embassy in Damascus, Syria, came under attack by four armed men on Tuesday but bounced off lows as it became clear that the attack had been foiled. See full story.

Crude-oil prices closed lower for the seventh session in a row. The benchmark October contract ended at its weakest level since Feb. 15, falling $1.85 to $63.76 a barrel. See Futures Movers.

On the data front, the U.S. trade deficit widened by 5.0% in July to a record $68.0 billion, the Commerce Department said. The July gap surpassed the previous monthly record of $66.6 billion set last October, and it came in above the consensus forecast of Wall Street economists calling for a deficit of $65.4 billion. Read more.

The U.S. dollar traded higher against its major counterparts. The euro was down 0.1% against the greenback at $1.2688. Against the Japanese yen, the dollar rose 0.3% to stand at 117.92. See Currencies.

Gold futures ended at their lowest level since late June. The benchmark December contract fell $3 to end at $594.30 an ounce. The contract has now declined for a fifth session in a row.

Management reshuffles

Shares of Hewlett-Packard
HPQ, -1.74%
gained 1.5% to close at $36.92 after Chairman Patricia Dunn said she would step down from her post in January 2007. Chief Executive Mark Hurd will replace her as chairman of the blue-chip technology bellwether at that date.

Dunn has been embroiled in a scandal over her role in the company's investigation into media leaks that led to phone records of board members and reporters being probed. Congressional investigators asked Hewlett-Packard to turn over information about the company's efforts to obtain private phone records. See full story.

Meanwhile, Bristol-Myers Squibb
BMY, -1.27%
gained 4% to close at $24.32 after the drug company said Peter Dolan will leave the position of CEO, effective at once. The board named James Cornelius, a director of the company since January 2005 and chairman emeritus of Guidant Corp., to act as interim CEO.

Dolan has been under fire for a series of management lapses, including his failure to delay generic competition for a blood-thinning drug. See full story.

Other stock standouts

Goldman Sachs
GS, -1.86%
kicked off the earnings season for investment banks. The company posted third-quarter earnings that handily topped analyst estimates, and revenue ranked as the third best ever generated by the Wall Street institution.

Quarterly revenue was driven by "strong" results in asset management, including securities services, and in investment banking, J.P. Morgan Chase analysts said in a research note. The stock closed up 4.8%. See full story.

McDonald's Corp.
MCD, -0.64%
saw its shares soar to their best levels since May 2000 after the fast-food giant said August same-store sales rose 6%, buoyed by strength in Europe and the introduction of its new "snack wrap." The stock rose 2.9% to $38.20. See full story.

Apple Computer Inc.
AAPL, -1.92%
was in focus after the company said it inked deals with Walt Disney Co.'s film studios to offer movie downloads through its iTunes online digital-media store and, as anticipated, took the wraps off a long-anticipated revamp of its iPod digital-media players. The stock overcame weakness to close 19 cents higher at $72.66. See full story.

The world's largest provider of mobile-phone chips tightened its third-quarter financial targets late Monday, saying it now expects total sales in the range of $3.71 billion to $3.87 billion, compared with its previous estimate of $3.63 billion to $3.95 billion. It also pegged earnings per share between 44 cents and 46 cents, compared to its previous outlook of 42 cents to 48 cents. The stock rose 72 cents to $31.50, after earlier touching a low of $31.02. See full story.

Home-electronics retailer Best Buy Co.
BBY, -0.86%
shot up as much as 7.5% to a more than two-month high of $51.35. The company reported a 22% increase in fiscal second-quarter profit, helped by the impact of recent acquisitions, more online selling and an increase in average transaction size. The Minneapolis-based company said gross margins weakened in the quarter but affirmed its profit forecast for the year. The stock shot up 9.2% to $52.14.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.